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Ask Securities Lawyer 101 l OTC Pink Current Disclosures

Posted on June 5, 2013 by securities-lawyer-101

Ask Securities Lawyer 101 Q. What is the OTCMarkets OTC Pink Current Tier? A. Companies on the Pink Sheets are assigned one of three tiers by the OTCMarkets based upon the amount of disclosure the Company provides to the public. The OTC Pink Current is the highest of the tiers and the tier assigned to companies that voluntarily provide specific disclosures to the OTCMarkets. Q. Are Companies quoted on the OTC Pink Sheets required to file reports with the Securities and Exchange Commission? A. No. Q. How does a Company become quoted on the OTC Pink Sheets? A. Private companies in going public transactions must locate a sponsoring market maker to file a Form 211 with FINRA, on their behalf. Once the Form 211 is approved by FINRA, the Company qualifies to be quoted with an OTC Pink Current tier. Public companies not providing information to the public must uplist to the OTC Pink Current tier by providing annual reports for its last two fiscal years, and quarterly reports for the interim periods since its most recent annual report.

The requirements to uplist to the OTC Pink Current tier can be viewed here: Under either scenario above, the Company must also subscribe to the OTCMarkets Disclosure and News Service to be quoted. In order to maintain the OTC Pink Current status, the Company must comply with the OTC Markets disclosure requirements for the tier. Q. What are the disclosure requirements for Companies quoted with the OTC Pink Current tier? A. Companies with the OTC Pink Current tier must file an Annual Report, three Quarterly Reports and one opinion from the Companys securities attorney as well as current information reports through the OTCMarkets service. The OTCMarkets requirements for Annual, Quarterly and Current Reports can be viewed here: Q. Are the reports filed by OTC Pink Current Companies available to the public? A. Yes, the reports can be viewed on the OTCMarkets website at

Q. What is a Current Report and when is it required? Current Reports report material events must be made within 4 days. OTCMarkets has identified a laundry list of items that require Current Report filings. These include sales of common stock or other equity securities, material modification to the rights of shareholders, entry into or termination of a material definitive agreement, completion of acquisition or disposition of assets, mergers, changes in control of the Company, creation of a direct financial obligation or an obligation under an off-balance sheet arrangement, changes in certifying accountant or non-reliance upon prior financial statements, departures, appointments or elections of officers or directors material impairments. Q. When are OTC Markets Quarterly Reports due? A. Quarterly Reports are required to be filed 45 days after the end of each quarter. Q. What information is required in the Quarterly Report?

A. The Quarterly Report generally requires among other things, the Companys contact information, shares outstanding, interim financial information for the period covered by the report, Managements discussion and analysis or plan of operation, legal proceedings, material contracts, articles of incorporation or bylaws, or amendments thereof, that have not been previously disclosed. Q. When is the TCMarkets Annual Report due? A. The Annual Report is due 90 days after the end of each fiscal year. The Annual Report requires among other things, general information about the Company, its business, management, 5% holders, capital structure, its transfer agent, facilities, contract with a value of over $120,000, service providers, managements discussion and analysis or plan of operation and financial statements for two most recent fiscal periods or shorter period as the Company or its predecessor has been in existence. Additionally, the Company must provide detail of all securities offerings conducted during the last two years including the facts surrounding the offering, identity of the individual recipient, consideration paid and exemption from registration relied upon. The Company must also describe or attach material contracts, articles of incorporation and bylaws, a table showing any purchases of equity securities by the Company or affiliated purchasers, and a certification stating that the Company has disclosed the items set forth above. Q. What are the requirements of the OTC Markets Attorney Opinion? OTCMarkets requires that issuers and their securities attorneys, who provide the legal opinion letters to the OTCMarkets, comply with their requirements. These include that the Companys securities attorney state it has personally met or had a face-to-face meeting with management of the issuer and that the disclosures comply with the OTCMarkets requirements. Q. What is meant by a face to face meeting with management? A. According to the OTCMarkets, the Personally Met requirement describes the process used by a competent securities lawyer to perform the work necessary to submit an honest and reliable letter with respect to the issuers disclosure posted through the OTC Disclosure and News Service. This process requires counsel to assist the issuer by participating directly in drafting the Information required under the OTCPink Basic Disclosure Guidelines. In drafting this disclosure, the attorney will examine the evidence that supports each material statement made in the Information. Some of this evidence will be

physical or documentary, while other evidence will consist of oral statements made to the attorney by executive officers who participated in or directed the events described in the Information. We believe that it is essential for the attorney to interview these officers personally to confirm the material facts described in the Information and clear up discrepancies in the evidence at hand. The securities attorney will then discuss the Information with the members of the issuers board of directors to confirm and correct the disclosure, where necessary, so that it is a correct statement of all material facts regarding the issuer and its securities. Attorneys who do not comply with its guidelines are banned by OTCMarkets. The OTCMarkets banned attorney list can be viewed here: